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Monday, June 17

17th Jun - US Close: More Fed-previews

Previously on MoreLiver’s:

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Roundups & Commentary
Markets – Between The Hedges
The Closer – alphaville / FT
US: Volatility Gets A Harding On Taper Chatter – ZH

The Next Europe: Toward a Federal UnionForeign Affairs
To succeed in the twenty-first century, the European Union needs to move forward now toward greater integration. This is how to do it.

Europe’s Economic GroupthinkProject Syndicate
During a hearing on the constitutionality of the ECB’s measures to prevent the eurozone from falling apart, Andreas Vosskuhle, President of Germany’s Constitutional Court, raised an important question: Do non-German economists condemn the ECB’s measures as unequivocally as most German experts do?

ESM’s direct recap plan: Really ‘breaking the link’?Brussels blog / FT
Remember a year ago when eurozone leaders promised to “break the vicious circle” between banks and sovereign governments by allowing the eurozone’s €500bn rescue fund to bailout struggling banks instead of leaving the task to cash-strapped national treasuries?

No Break for Periphery BanksCFR
EU ministers apparently made little progress last week on terms under which the European Stability Mechanism (ESM) would recapitalize weak banks, though they still hope for an agreement by end month.

Germany regards European integration, of which the euro is the apotheosis, as a crucial national interest. The judges in Karlsruhe are wary about reaching any judgment that would conflict with this overriding foreign-policy objective.

The ECB is not breaching the lawFree exchange / The Economist
We have invited Holger Schmieding, chief economist at Berenberg Bank, to discuss the legality of the ECB's actions.

ECB’s Weidmann: Deeper Fiscal Union Needs More Public SupportWSJ
A broad deepening of fiscal integration leading toward a "fiscal union" in the euro zone requires deeper public support than currently exists both inside and outside Germany, ECB Governing Council member Jens Weidmann said.

Yves Mersch: The European Central Bank’s role in overcoming the CrisisECB

FOMC preview Danske Bank (pdf)
Once again Bernanke faces a communication challenge

Fed heading for exit: stand clear of the closing doorsNordea (pdf)
Or the summary here.

Watch What Fed Says, Not What It DoesWSJ
At this week's Fed monetary policy meeting, it comes down more to what officials will say, than what they'll do.

The Fed’s Tapering Trial BalloonWSJ
“It may be that policymakers wanted to ‘test the waters,’ determine the pervasiveness and ultimately force the shake out of some carry trades,” BCA Research wrote in a report.

Why the Fed’s ‘Tapering’ Matters So MuchWSJ
Ahead of the Fed’s two-day meeting, beginning tomorrow, here’s a look at what has happened in the markets since Bernanke said on May 22 that the Fed could start pulling back its bond buying sometime within the next few meetings.

FOMC Meeting Begins TomorrowTim Duy’s Fed Watch
This FOMC meeting is about the Fed regaining - or further losing - control over its communication strategy.  Bernanke will attempt to detail how exactly the data flow is supportive of scaling back asset purchases in the next few months (I believe the Fed prefers September) while at the same time disassociating asset purchases from interest rate policy.

Taper talk persists despite missed jobs, inflation targetsMacroScope / Reuters
So, either policymakers see brighter skies ahead or they want to get out of QE3 for other reasons they may rather not air too publicly: worries about efficacy or possible financial market bubbles.

FT Joins The Fray: "Fed Likely To Signal Tapering Move"ZH
Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent moves depend on what happens to the economy.

What The Fed Is Looking AtZH
From an economics perspective it was just a matter of time before conditions began to break down; gains in equity indexes to record highs amid sluggish economic performance were simply unsustainable.

JPMorgan: "Fed Stimulus Inflated Prices....Removal Could Create Tail Event"ZH
Then: Risk-On/Risk-Off: Ironically, positive data caused equities and bonds to trade lower on increased probability of tapering (good data were bad for stocks)….Now: the "Fed Regime": ecent bouts of positive correlation of equities, bonds and commodities, suggest that the Fed’s stimulus inflated prices of a broad range of financial assets, and removal of the stimulus could create a tail event in which prices of all assets could go down.

What the Fed tapering debate and Justin Bieber obsession has in commonWonkblog / WP
If the economy evolves as expected, has the Fed become any more or less inclined to maintain its easy money policies than it was a few months ago? I am reasonably confident that the answer to that is no, and that the volatility we’ve seen in markets around the tapering debate is not grounded in something real.

Empire State Manufacturing Survey – N.Y. FED (pdf)
Empire Manufacturing: A Weak Stronger Than Expected Report – Bespoke
NY Fed Manufacturing Index Improved in June – WSJ
Headline Beats Despite Plunge In Most Indicators, "Labor Market Conditions Worsened" – ZH

Wahlroos: Tärkeimmästä asiasta vaiettiin KultarannassaHS
Nordean hallituksen puheenjohtaja Björn Wahlroosin mielestä presidentin järjestämässä keskustelussa pitäisi keskittyä Euroopan talouteen ja sen rahapolitiikkaan, mutta niihin ei avauskeskustelussa kajottu.

Tuomioja: EU:lle ei ole Suomessa vaihtoehtojaHS
Maailman muutos kirvoitti ulkopolitiikan tuntijoilta monta erilaista vertauskuvaa presidentti Niinistön Kultaranta-keskusteluissa

Attacin raportti nostatti raivon Saksassa: "Kreikka-tuki mennyt lähes pelkästään pankeille"YLE
Süddeutsche Zeitung -sanomalehden siteeraaman raportin mukaan Saksa on antanut Kreikalle hätälainaa 207 miljardia euroa, josta lähes 160 miljardia euroa on mennyt pankeille ja sijoittajille.

Puheen Iltapäivä: Mielipiteitä Suomen nykytilaan ja tulevaisuuteenYLE
Kirjailija ja kolumnisti Kalle Isokallio kertoi Puheen iltapäivässä totuuksia Suomen tilasta. Toimittaja Miia Krause